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    Published on: April 17, 2017

    by Kevin Coupe

    Few likely would've guessed that close to two million people - 1.17 million on YouTube, and 700,000 on Facebook - watched a giraffe give birth on Saturday morning.

    But that's exactly what happened. The mother giraffe is named April, and the run up to her giving birth at the Animal Adventure Park in upstate Harpursville, New York, has been the focus of enormous interest. At one point, the live streaming of her waiting game - which seemed to me like it took forever, so I can only imagine how it felt to April - attracted close to five million views in a single day. And once the baby giraffe was born, a four-hour video of the happy event got more than 13 million views in less than 24 hours.

    That's remarkable. And a reflection of precisely how powerful social media can be, and how captivating content can serve as a lure to viewers/consumers.

    Mrs. Content Guy and our daughter, Allison, have been watching this story unfold for weeks, and while I initially was a little skeptical, I found myself intrigued enough to watch over their shoulders and then, occasionally surf to the website on my own.

    Longtime readers of MNB know that I rarely, if ever, say anything nice about Toys R Us, but I'm going to do precisely that right now. Because Toys R Us (which happens to have a giraffe as its mascot) was smart enough to attach itself to the YouTube stream as a sponsor. Its logo appeared on screen for the weeks before the birth, and then - once the baby giraffe had been born - the logo changed to Babies R Us.

    Very smart. I'm not sure it is going to help the company sell more products, but I have to give credit where credit is due.

    Now, I have one more suggestion if they want to get a little more positive publicity for this baby giraffe. (Actually, it is my son Brian's suggestion.)

    They should name the giraffe Jackie. After all, the giraffe was born on April 15, which is celebrated in the US as Jackie Robinson Day, marking the anniversary of the day that Robinson made his Major League Baseball debut in 1947.

    Good idea. The birth of this giraffe has been an Eye-Opener all around, and there is no reason it should stop.

    KC's View:

    Published on: April 17, 2017

    Re/code reports that Walmart is engaged in "advanced discussions" to acquire men's fashion retailer Bonobos.

    According to the story, "Sources say the two sides have agreed on a price ... and that the deal is in its final due diligence stages." The price is expected to be more than the $70 million Walmart spent for Modcloth; Bonobos is more profitable, generating between $100 million and $150 million in annual revenue.

    The Re/code story also provides some context: "Bonobos was founded in 2007 by CEO Andy Dunn and Brian Spaly as an e-commerce shop selling dress pants designed to fit athletic men. Since then, the company has expanded into dress shirts, suits and outerwear, and started to sell through Nordstrom, which is an investor, in addition to its own website. Dress shirts start at around $98 and suits at $550.

    "Over the last few years, Bonobos has also opened more than 30 brick-and-mortar showrooms, called Guideshops, where customers can get fitted and place orders to be delivered to their home."
    KC's View:
    The Re/code story makes the point that while the fit would not seem to make sense, there are two potential positives for Walmart ... the ability to own "digital-native companies with strong brands that appeal to a different demographic than Walmart does, and ... have the potential to be healthy standalone businesses with Walmart’s backing," and the ability "to bring new digital leadership into Walmart," since the leadership of these acquired companies are staying.

    This all seems to be the master plan devised by Marc Lore, who sold Jet to Walmart and how is running all of its e-commerce operations. But the question remains whether this builds a stronger foundation at Walmart, or creates a series of offshoots that are both costly and distracting.

    We have a story below pointing out that more than nine out of 10 US shoppers patronized a Walmart last year ... a far greater percentage than shopped at Amazon. The cobbling together of all these different retailers does little, I think, to build on the company's traditional strengths in the short-term. In the long-term, the questions is whether the sum of the parts will be greater than the whole.

    Published on: April 17, 2017

    The New York Post reports that BJ's Wholesale Club is being put up for sale by its private equity owners, and Amazon is said to have "modest internal interest" in acquiring the chain.

    The story says that owners CVC Capital Partners and Leonard Green & Partners have scrapped plans for an initial public offering (IPO) for the chain, and instead "are pressing ahead for an outright sale that could fetch more than $4 billion." They bought BJ's six years ago for $2.8 billion, though analysts believe that ownership has hurt the chain through a combination of "cost-cutting and cash-skimming."

    The Post frames the story this way:

    "BJ’s has been interviewing bankers so it can begin a sale process, and the company plans to distribute sales books in a few weeks, sources said.
    Retail-savvy buyout firms, like KKR, Bain Capital, TPG and Blackstone, are expected to take a look, insiders said. In 2011, Walmart made an unsuccessful approach to buy BJ’s, but is unlikely to make another attempt, one source speculated.

    "Meanwhile, Amazon — which has been exploring an expansion into brick-and-mortar stores after conquering online retailing — has also recently discussed evaluating BJ’s as an acquisition target, a source close to the situation said."
    KC's View:
    I've generally been skeptical about rumors that Amazon is interested in acquiring an existing bricks-and-mortar retailer, but this one would seem to make more sense than some of them. After all, Amazon could use the warehouses for more than just retailing ... but it also might be a way to reinvent a new format that builds on what it has been doing.

    I'm still not persuaded. But I am intrigued. Modestly.

    Published on: April 17, 2017

    CNBC reports that new data from The NPD Group's Checkout Tracking Service suggests that Americans as a whole tend to be value-driven consumers, with about 95 percent of US shoppers buying something at a Walmart during 2016, and 89 percent buying something at a McDonald's.

    In third place was Target, where 84 percent of Americans shopped last year.

    As for Amazon ... the story says that "despite accounting for more than half of the growth in online spending last year, Amazon barely squeaked into the top 20. Some 42 percent of consumers spent money on Amazon, according to NPD. Amazon tends to attract a higher-income shopper than Wal-Mart, though the expansion of its subscription Prime program to a broader swath of the population has lowered its shoppers' average income."
    KC's View:
    This tells us, I think, that Amazon has a lot of room left in which it can grow. And that Walmart's chief challenge is to figure out how to sell more stuff to the people it already serves. The question that remains - and to which I honestly do not have an answer - is how far Walmart can wander outside its traditional lane in making this happen.

    Published on: April 17, 2017

    The Wall Street Journal reports that Whole Foods "wants to cut prices without sacrificing the local products that define its healthy image," though this plan may run counter to the direction in which investors want to push it.

    Those players, including the hedge fund Jana Partners that last week became the chain's second largest investor, "are pushing the organic food pioneer to boost profit by operating more like a big-box grocer." However, "some smaller suppliers and industry consultants say the shift to a more centralized distribution structure and other changes risk compromising Whole Foods’ ability to keep stocked with the latest foodie trends and hot local brands."

    The price-cutting initiative, the Journal writes, is "being spearheaded by Don Clark, a former Target Corp. executive hired in November 2015 to run Whole Foods’ grocery operations. The data analytics, centralized purchasing and strict shelf management he brought from Target could save money that Whole Foods can use to lower its relatively high prices, addressing a key customer complaint. But matching its competitors on price could also mean limiting how often it updates the products Whole Foods stocks."
    KC's View:
    "For what does it profit a man to gain the whole world and forfeit his soul?" (Mark 8:36)

    Published on: April 17, 2017

    The Des Moines Register reports that Hy-Vee is going through a corporate office reorganization, with dozens of employees being reassigned and others possibly facing layoffs.

    Hy-Vee spokesperson Tara Deering-Hansen tells the paper, "We are redirecting how we are supervising and structuring certain administrative areas of the company. At this time, the majority of the people whose positions are impacted will be reassigned to other positions within the company, including opportunities at retail ... We are a growing company. As we continue to evolve our services and product offerings, we will grow other areas within the company."

    The Register writes that while some positions are being eliminated, others are being created, specifically in the IT department, focusing on digital initiatives, and in its HealthMarket and restaurant development departments.
    KC's View:
    Think of this as the circle of life. As the world changes, retailers have to adjust their organizations so they can effectively and efficiently deal with new realities. If they think they can deal with new realities with old organizational constructs, I think they're making a mistake.

    Published on: April 17, 2017

    Forget influencing presidential elections. The New Yorker has a story about how "one of Russia’s largest fast-food chains, Teremok, has expanded its reach to Manhattan, and has set about dispensing fast-casual Russian cuisine to the masses of tourists and commuters who pass through the crowded streets of midtown."

    Teremok's version of the big Mac is the blini, described as "the Russian equivalent of crêpes, thin pancakes folded around fillings such as sweet cheese, ground meat, or salmon roe. Unlike their French cousins, blini are made with yeasted dough, so they are airier and lighter, with a hint of sourness that complements sweet fillings and adds complexity to savory ones."

    Now, having opened so many locations in Moscow that The New Yorker describes them as being "almost comically ubiquitous," the plan is to invade New York City and maybe beyond.

    Why? The chain’s founder, Mikhail Goncharov, says it is simple: America, he says, is "the motherland of fast food.”

    You can read the entire story here. (Good luck not getting hungry.)
    KC's View:

    Published on: April 17, 2017

    There were a couple of retail-oriented stories in the New York Times over the weekend that looked at the past, present and possible future.

    One compares the virtually desolate Burlington Center Mall in New Jersey, which used to be enormously busy but now is barely a shell of itself, to a "beehive of activity just 20 miles to the south." That beehive is an Amazon fulfillment center, where "more than 4,000 people and an indeterminate number of robots store, pick, pack and ship the company’s countless inventory, sometimes for same-day delivery. Inside the building, 10 miles of conveyor belts are the veins and arteries of this outpost of the e-commerce giant."

    But that doesn't mean the mall is dead - just that their ability to survive may be a matter of location, demographics and vision. You can read the story here.

    And, the Times had a similarly themed story about how "today, some of the most sought-after real estate by retailers is not in SoHo, but five miles away in Red Hook, a gritty Brooklyn enclave with a shipbuilding past. E-commerce merchants are vying to lease part of a huge warehouse space, spanning 11 acres, that would allow them to deliver goods the same day they’re ordered online.

    "The profound reordering of New York’s shopping scene reflects a broad restructuring in the American retail industry."

    You can read this story here.
    KC's View:

    Published on: April 17, 2017

    • The Seattle Times has a story about Amazon Crossing, the unit of the company that finds foreign books and translates them into English, which has "in a short time become the most prominent interpreter of foreign fiction into English, accounting for 10 percent of all translations in 2016, more than any other publishing house in a field populated by small imprints.

    "It helps that Amazon is rather numbers-driven about its tastes, which tend toward blockbuster genre fiction — crime thrillers and romance novels — although it also picks well-regarded literary jewels its editors feel would do well with an English-speaking audience."

    The story suggests that while Amazon continues to have a contentious relationship with some publishing companies and authors, its "rapid rise to prominence in the translation of foreign prose is yet another sign of its growing cultural significance."
    KC's View:

    Published on: April 17, 2017

    ...with brief, occasional, italicized and sometimes gratuitous commentary…

    • The Associated Press reports that "Martin’s Food Markets will lay off hundreds at the last three stores to close before being converted to Publix Super Markets ... Ten Martin’s stores in the area have been sold to Florida-based Publix, which will renovate and reopen the stores. The other seven stores laid off a combine 1,100 employees in November and February ... Martin’s sold the stores to comply with federal antitrust regulations after the parent companies of Martin’s and Food Lion merged."

    • The San Antonio Business Journal reports that "H-E-B Grocery Co. is celebrating a big employment milestone. The grocer said it's passed the 100,000-employee mark, making it the largest privately held employer in Texas. The grocery chain has 90,000 employees across its 332 Texas locations and 10,000 spread across its 56 locations In Mexico."

    The story says that H-E-B "has created more than 24,000 jobs since 2008. Nationwide, it has more than 388 stores and plans to add nine new Texas locations and six in Mexico this year."

    Curbed Los Angeles reports that Whole Foods has identified three new locations in Southern California where it plans to open its "365 by Whole Foods" format - in Santa Monica, at the corner of Pico and Cloverfield south of I-10 freeway, as well as in Long Beach and in the North Hollywood Arts district.

    • The Canadian Press reports that Loblaw is saying that it plans "to open 30 new stores and renovate more than 500 existing stores as it continues to adapt to changes in the food retail sector ... Loblaw said the moves would invest about $1.3 billion into the economy and create an estimated 10,000 retail, trade and construction jobs."

    According to the story, "The grocery and pharmacy giant said the investment included the continued roll out of its Click & Collect e-commerce, improved health and wellness services, and the inclusion of fresh food at select Shoppers Drug Mart locations."

    • The Washington Post has a story about the continuing travails of Toys R Us - in part because the streaming trend hurt its video game and electronics business, and in part because when other toy retailers discounted significantly during the 2016 holidays, Toys R Us resisted the urge - and now finds itself with last year's inventory that it needs to dump to make room for this year's. At the same time, Toys R Us finds itself competing - not very successfully - with online behemoths such as Amazon.

    The company says it wants "to reinvigorate its stores by making them into more of a hangout ... It wants to hold more in-store events for the community." Plus, it is hoping that a film release schedule that includes many with toy licensing tie-ins - such as the new Spider-Man and Star Wars movies - will help it generate new traffic and sales.
    KC's View:

    Published on: April 17, 2017

    Got the following email from MNB reader John Phillips regarding my United Airlines commentary:

    I agreed totally with your POV on the United handling of the customer pulled off of the Chicago flight- you made the point (rightly) about how other CEO’s should view this circumstance and make changes so they can avoid a similar issue.

    One point I would add to this is that as more corporations outsource certain activities to third party providers (as was the case with United and the people who physically- some would say violently pulled off the customer) it certainly places you at the mercy of how the third party manages the customer interface. Those individuals, who were clearly overzealous in managing this interface with a customer, placed United in an awful situation which resulted in a hit to their brand and likely a 7 figure settlement with this flyer. I will avoid United at all costs in the future based upon the fact that they clearly don’t put the customer first in the way they act and based upon the quality of their product.

    MNB reader Chris Utz wrote:

    I’ve had poor service with Delta as well.  I had a 6am flight that we had boarded; but the plane just sat.  After a long while the pilot came on and said they were waiting to take a flight crew to Chicago.  We sat there for about 1.5 hours, while 2 other scheduled flights left for Chicago on time.  I guess they only wanted one late plane to report to the FAA.

    Another time I had a 6am Delta flight to Houston.  I asked if I could change to DFW, since a client wanted me to do something there.  Delta said they would gladly change destinations, for only $943…  I found a United round trip flight from IAH to DFW for $250 that I could make, so I scheduled it. 

    The Delta flight was late “due to weather” which I later found out was mechanical problems.  Delta refused to put me on another carrier, to DFW or IAH.  After about 40 minutes, I heard my name called for a flight to LaGuardia that was ending the boarding process.  I ran to catch it, finally arriving in Houston at 10pm (over 12 hours late).  I had an unbillable day and hotel expense… 

    When I called United about the missed flight, they apologized for Delta and changed my flights, at no cost.  Guess who I prefer to fly with; If I absolutely need to fly... 

    Delta sent an email a few weeks later, asking how I liked their service from MSP to IAH…  I told them, that in the future, I would try to avoid Delta, if at all possible.  I told them I felt like the passenger in “Airplane” who was trying to hang himself.  Delta sent me 2,500 bonus miles, about a month after the event. 

    I took a Business Class flight to Europe last winter which was wonderful.  However, I’m mostly in coach for business travel, where I feel like a sardine, or perhaps cattle on the way to the slaughterhouse.  Considering how we are treated by the airlines and the TSA, I try to avoid air travel if possible.

    We had a piece the other day about how outlet malls seems to be succeeding even as a lot of traditional malls are in crisis. Which prompted one MNB reader to write:

    Great timing. I found myself at a Tanger outlet mall in Commerce, GA on Sunday. While the access was the worst I have ever seen for anything retail (you had to drive almost 1 miles after getting off of the highway - and they have to lease a giant billboard on a side street pointing people in the right direction), I did take note that the parking lot was mostly full.

    After going in to check out an Under Armour golf polo ($65) I decided to check Amazon just for fun. Amazon was selling a variety of golf shirts from $10-40, and would have saved me the time/trouble of getting in and out of that mall. I left the center feeling that retail was in serious trouble - and I am surprised to read this report today. It will certainly be interesting to see if they can continue to grow sales while many retailers struggle.

    Proving that pretty much everyone is susceptible to disruption.

    On another subject, from another reader:

    Strikes me that Kroger is a more likely acquirer of Whole Foods than Amazon, and from the outside it seems that Kroger and WFM are in a long term romance.  Weren't there rumors of a possible merger 2 years ago?  And 6 months ago, WFM said it would utilize Dunnhumby to analyze customer data and category trends.  And more recently, a Harris Teeter exec is being considered for the board.  It just seems that Kroger is much more likely to launch a takeover than any other retailer.  Maybe it's a situation where the people who know aren't talking???
    KC's View: